EUR/USD – Sharp Drop Into Demand Zone
This afternoon the ECB came out and said that it was cutting it’s inflation outlook through 2019. When this news hit the market it caused a sharp drop to take place into the demand zone I said to watch for entries long in yesterday’s post. Since the drop took place the market has rebounded, and is currently moving back up to the highs in a very strong fashion.
By the looks of it, it seems like we are going to see the market break through the current high within the next few hours. If this takes place the demand zone which has caused this move higher to occur will become a buy zone we can use to look for entries long in the event of the market falling. For now there isn’t really anything I can recommend in terms of trading opportunities. The one thing I would say is that if you have managed to get a trade placed at the demand zone, make sure you move your stop to breakeven once the market has closed above the high, as that would be confirmation the market is going to continue moving higher.
USD/JPY – Small Consolidation Taking Place
I mentioned in yesterday’s market commentary how we would soon see a consolidation or retracement take place on USD/JPY, due to the fact none had taken place since the market hit the price action zone late Monday night. In turns out that today we have seen a consolidation begin, with the market failing to break lower during a test that occurred late this morning.
I’m not sure how long this consolidation is going to last for, but I wouldn’t expect it to be long with all the high impact news we have coming out tomorrow. As far as trades are concerned, there isn’t anything I can suggest at the moment. I would say to watch for an entry long in the daily demand zone, but the fact the consolidation has started above it, as opposed to in it, like I thought it would, leads me to believe that we are going to see the market break through it when the news comes out tomorrow.
AUD/USD – Supply Zone Broken By Sharp Move Higher
The supply zone which the market had just entered at the time yesterday’s post came out got broken last night, by a sharp move higher that began once the AUD GPD news has been released.
As you can see from the image, the drop out of the supply zone was not very substantial, which suggested we were going to see the market break through the zone anyway, regardless of the news being released. The market is now inside a daily supply zone that formed from a drop which took place in the middle of April. With the way things are looking at the moment I don’t think this daily zone is going to cause a reversal to occur, though I do think we could see a retracement or consolidation take place once the market has moved a bit deeper into the zone.
For now I suggest you just keep watching for more price action to form.